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It does support being horizontal. My filter takes up the entire left side of the top of my tank so I can't place the heater horizontally there. The intake tube is about 3" from the gravel roughly. I could however remove 1 section of the tube, that would place it about 7" above the gravel and the heater in between the intake and the gravel. Would that be more efficient?

That would cover half of the in-flow - as the intake tube runs up the middle of the filter (clicky to my filter). But that would be better than nothing. I suppose I could try it. I personally think the heater is miscalibrated.

Deciding which placement would give the best heat. And how much lower than the base of the filter should the water be? right now it is filled to the frame rim (about 1/2 - 3/4" from the top of the tank)

I also have all the aquarium equipment (Filter, light when on, heater) connected to the same power strip if that makes a difference. For the last couple hours with the dial set to 72, the water has been holding steady on the digital thermometer at 78.1 degrees. I will keep it there over night to make sure it holds steady. The hood is also currently closed if that makes a difference. The only opening really is a small section around the part that broke away for the filter to rest.

The hood definitely makes a difference. Does the heater have a light to see if it is on or off? What is your room temperature? The heater very well could be miscalibrated but still precise, meaning you could expect steady temperatures from its thermostat, just following your digital thermometer for setting it.

I imagine half the flow is fine, even placing it vertically next to the inflow would work if you like the look better. You could also place it horizontally on outer side of the heater (towards the center of the aquarium).

Filling to the trim frame is ideal, although as long as your filter is still able to draw water letting it go lower isn't a big deal.

The house temp is holding at a steady 71 degrees and heater does have an on / off light to tell when it is on, but it seems to be holding steady based on the thermomemter. I did pull the hood out a little bit so the filter itself can rest flat. I need to cut out a small piece of it so it still slides back without having to slightly tilt the filter. Since when the hood is all the way back I tended to notice a small rattling noise with the filter. As of right now I am keeping the light off on the hood though. No need for it when there are no fish in it yet.

And how much lower than the base of the filter should the water be? right now it is filled to the frame rim (about 1/2 - 3/4" from the top of the tank)

This is a waterfall filter. You should keep the water level above the waterfall so that about 1/2 inch of the plastic filter waterfall (where the water falls over into the tank) is below the surface and you have 3-5 surface ripples. This breaks the surface tension and oxygenates the water. Also, if you the lower the water level the waterfall is very strong - the water falling into the tank will stress the fish. It also creates very unattractive bubbles and a lot of noise.

I have been doing some fish window shopping the last day or so, so that I am starting to think of options for the tank once it is ready to be stocked. But I am starting to get dumbfounded at the number of options there are.

I would like to get an Angelfish as the centerpiece fish, but not to sure what all to put in with it. Currently have the tank stable at 77.5-77.7 degrees, ph of my water is roughly 7.5 from the tests I have done. I am still cycling the tank, that has only been going for a few days so I got time. But I am trying to get some ideas so I can give the kids a few options to choose once it is ready. I know the kids like the colorful fish, many of them seem to either get to large for this tank or are in the semi-aggressive category.

For decoration in the tank there are only a couple fake plants so far and 2 smaller decorations for hidings spots and one larger one that looks like a hollowed out tree trunk that takes up nearly a 1/3 of the bottom.

I come home from work last night only to find the tank now has 6 small all black fish in those little aquarium bags floating at the top. I think they might be Mollies but I am not sure. Since the fish store was already closed for the night by that point I did the slow intro to the tank but now that the kids have seen them they may be impossible for me to return them. Luckily they are still rather small and not taking up a load of room. But I will have to monitor the water closely and go get a gravel siphon to start water changes. not sure how soon I should start them.

So I have been away for awhile. But the tank is still going strong. I did though recently have a small bloom of brown algae but quickly got that fixed up.

I still have the original school of 6 Black Mollies going strong. So much so that they have started breeding as I have noticed a few small fry lurking around. As a result I added alot more fake plants along the bottom to give them more hiding spots, a decent sized chunk of driftwood and some floating live plants as well. Although most of them got eaten though but that was before I was able to get the added decor/hiding spots for them.